Cryptocurrency is becoming more and more mainstream which makes it difficult for everyone to ignore investing in it. The question is that how to buy cryptocurrency?
If you have been thinking lately about making a cryptocurrency trade, you are not alone! The cryptocurrency fever has taken over the public in tremendous spirits and it’s not going away anytime soon.
Well, buying cryptocurrency may seem a simple task but it is not, especially for those who are doing it the first time.
The buying process requires intricacies which you need to understand before getting into the real business.
Or else, you’d find yourself befuddled amid the process of buying or investing in cryptocurrency – which is not a good place to start for any investor.
To keep yourself sane and informed before buying a cryptocurrency, you should read this article. As we have described the process in steps and quite elaborately. Here’s how to buy cryptocurrency?
Choose an Exchange
There are several cryptocurrency exchanges in the market. These exchanges allow the investors to buy, sell, and keep their digital money once you have signed up. Each exchange has its own policies and features that are particular to it.
Some exchanges are entirely decentralized and do not require any verification from investors. This means that you can make your trades anonymously.
This may seem easier and fashionable but such exchanges can be used for transferring illegal transactions or those who want to keep their money off the record.
However, some exchanges are non-decentralized and do require personal information to sign up (KYC – Know Your Customer).
Coinbase, Kraken, Gemini, and Binance U.S. are a few non-decentralized exchanges among many. Each of these offers different features.
Coinbase, Kraken, and Gemini support many altcoins such as Litecoin, Dogecoin, Binance coin, Ethereum, Bitcoin Cash, and more.
Thus, it’s up to you which exchange you would choose considering your needs and preferences.
Binance US
Binance US was launched in 2019 and offers an online trading platform for US residents. Crypto investors can trade in Bitcoin and 50 other cryptocurrencies through this exchange.
However, the Binance US is not open for all states including Connecticut, Hawaii, Idaho, Louisiana, New York, Texas, and Vermont.
It offers plenty of trading options; over-the-counter trading option, staking rewards, recurring buys, Stablecoins, and crypto trading pairs.
Choose a Payment Option
Once you have successfully signed up for an exchange, you’ll have to choose a payment option.
Mostly the exchange would allow you to connect your bank account, debit, or credit card directly.
You can also use your credit card to buy crypto. However, it is not recommended because of the cryptocurrency market’s volatility.
Besides, some banks don’t allow cryptocurrency deposits even though Bitcoin is legal. So, you must check that beforehand that your bank does or does not allow the cryptocurrency you are going to be trading in.
The banks offer deposits at a fee that varies for the bank account, debit card, and credit card.
if you are a beginner at crypto, Coinbase would suffice your naiveness as it has only a 1.49% fee for bank accounts while merely a 3.99% fee for debit and credit cards.
Make a research about bank fees and choose which suits you best. Moreover, exchanges charge transaction fees as well.
Exchanges charge flat fees for low amount transactions but can be a percentage of the amount being traded. Also, beware of the processing fees credit cards incur.
Binance US charges the minimum trading fee among all exchanges, as it charges only 0.1% spot trading fee. 0.5% instant buy or sell fee, and 4.5% fee for deposits with US debit card.
Place an Order
After choosing an exchange and a payment option, you can now buy a cryptocurrency of your choice.
Cryptocurrency exchanges have gradually expanded their features reinforcing the reliability of digital money which was extinct in the beginning.
There are several ways and order types offered by crypto exchanges that one can use to make an investment.
Nearly all exchanges offer different types of orders such as market orders, limit orders, stop-loss orders, stop-limit, take-profit, and take-profit limit orders.
With staking orders of Binance US, you can earn rewards on holding the assets for a specific time period.
Besides, Cryptocurrency pairs are also available on Binance US which allows you to compare them and choose the one you feel better to make a profit with.
Choose a Wallet
Besides crypto exchange, you can also save your digital assets in your personal wallet.
Having a personal wallet outside the crypto exchange confirms additional security and prevents the risks of losing money in case the exchange gets hacked.
Each wallet has its specific characteristics and features. Some wallets only support Bitcoin and others may support several altcoins. Crypto wallets are of two major types hot wallets & cold wallets.
Hot Wallets
Hot wallets are online wallets that can be used by devices connected to the internet, such as mobile phones, laptops, and computers.
While hot wallets can be handy for quick transactions but they are susceptible to hacking. Because private keys are generated for your coins on the device you’re using.
For those who do not take this on a serious note and do not use security practices, their funds are always at a risk of getting stolen.
Thus, one must avoid bragging openly about having large deposits of digital money. However, using strong passwords and two-factor authentication along with safe
internet browsing can diminish the risks of money theft. If you hold a small deposit, hot wallets are a good option.
Cold Wallets
Cold wallets are the wallets that are not connected to the internet – thus eliminates the risk of hack-related money theft.
The cold wallets are also referred to as offline wallets or hardware wallets.
These wallets are designed to store the user’s key on something that wouldn’t be connected to the internet.
These wallets can be a paper wallet or a hardware wallet that is usually a USB drive.
How does a paper wallet work? It can be generated off of certain websites, where public and private keys are written.
You can take a print of that and keep it somewhere safe such as a bank locker or at home. People who intend to make long-term investments usually use paper wallets.
Whereas a hardware wallet – the USB drive can be used to store one’s private keys and keep them secure offline.
This way, your keys are not exposed to the internet and the risk of hacking is no longer there.
Can I use PayPal to Buy Cryptocurrency?
PayPal allows investors to buy four cryptocurrencies – Bitcoin, Ethereum, Litecoin, and Bitcoin Cash.
Except for Hawaii residents, the rest of the states can use PayPal accounts to buy cryptocurrencies.
Either one can use their PayPal account to make a purchase or one can use PayPal balance to buy cryptocurrency from a third-party provider. The former option is convenient than the latter one, though.
What is Required to Create a Crypto Account on PayPal?
- Name
- Physical address
- Date of Birth
- Tax Identification Number
Besides using the existing balance in your PayPal account, you can also use a Debit card or Bank account linked to your PayPal account for buying cryptocurrencies.
Using PayPal for purchasing cryptocurrencies has one disadvantage that you cannot transfer the crypto from PayPal’s wallet to an external crypto wallet or your personal wallet.
Another disadvantage is that only a few exchanges and online traders support PayPal to purchase cryptocurrency. eToro is one of those few online traders that allow PayPal for buying Bitcoin on eToro.
What are the Other Ways to Buy Bitcoin?
You can use also use Bitcoin ATMs or P2P exchanges to buy Bitcoin. By simply inserting cash into Bitcoin ATM, you will purchase Bitcoin which is then transferred to your digital wallet.
In the P2P exchange method, you can post requests to buy or sell Bitcoin. After finding a suitable prospect, you can transfer your money to the buyer or receive it from the seller.
It’s better to invest in renowned cryptocurrencies than altcoins – as altcoins are a risky choice but that doesn’t mean they aren’t worth investing in.
If you decide to buy altcoin, beware that many altcoins can’t be bought with USD but Bitcoin only, and then you can swap them for the altcoin of your choice.
Hopefully, this article has given you a quick insight into the process of how to buy cryptocurrency.
But no amount of research can ever be enough, there is still a lot to learn on your way to making digital money.
In our opinion Binance Exchange is best for trading and for holding long term coins. Just make an account on this exchange by following this simple guide and you are ready to start trading on Binance Exchange.
If you want to know more about cryptocurrency check other blog posts on our website.
